SACRAMENTO, Calif. (AP) — Google will soon give California millions of dollars to help pay for local journalism jobs in a deal that’s unique in the nation, but journalists and other media industry experts call it a disappointing agreement that largely benefits the tech giant.
The deal, hammered out behind closed doors and announced this week, will free up tens of millions of public and private dollars to keep local news organizations afloat. Critics say it’s a textbook example of a political maneuver by tech giants to avoid paying compensation under what could have been landmark legislation. California lawmakers voted to kill a bill that would have required tech companies to support news organizations they make money from in exchange for Google’s financial commitment.
By shelving the bill, the state essentially gave up a provision that could have required Google and social media platforms to make ongoing payments to publishers for linking to news content, said Victor Pickard, a professor of media policy and political economy at the University of Pennsylvania. California also left behind a much larger amount of funding that could have been secured under the legislation, he said.
“Google got off easy,” Pickard said.
According to Google, the deal will benefit both the journalism and artificial intelligence sectors in California.
“This public-private partnership builds on our long history of working with journalism and the local news ecosystem in our home state, while developing a national center of excellence in AI policy,” said Kent Walker, president of Global Affairs and chief legal officer for Google’s parent company Alphabet, in a statement.
Governments in the US have been working to help struggling news organizations. The US newspaper industry has long been in decline, with traditional business models collapsing and advertising revenues drying up in the digital age.
As news organizations move from primarily print to primarily digital, they have become increasingly dependent on Google and Facebook to distribute their content. While publishers have seen their advertising revenues decline significantly over the past few decades, Google’s search engine has become the centerpiece of a digital advertising empire that generates more than $200 billion annually.
The newspaper’s owner, the Los Angeles Times, said it was losing up to $40 million a year. Earlier this year, it laid off more than 100 people.
More than 2,500 newspapers have closed since 2005 and about 200 counties in the U.S. have no local news organizations, according to a report from Northwestern University’s Medill School of Journalism.
California and New Mexico fund local news grant programs. New York this year became the first state to offer a tax credit program for news organizations to hire and retain journalists. Illinois is considering a bill similar to the one that died in California.
Below is a closer look at the deal California struck with Google this week:
What does the deal entail?
The deal, which totals $250 million, will provide money for two endeavors: funding for journalism initiatives and a new AI research program. The agreement only guarantees funding for a five-year period.
About $110 million will come from Google and $70 million from the state budget to boost journalism jobs. The fund will be administered by UC Berkeley’s Graduate School of Journalism. Google will also contribute $70 million to fund the AI research program, which would build tools to help solve “real-world problems,” said Assemblymember Buffy Wicks, who brokered the deal.
The deal is not a tax, a marked departure from a bill Wicks authored that would have imposed a “link tax,” requiring companies like Google, Facebook and Microsoft to pay media companies a percentage of advertising revenue for linking to their content. The bill was modeled on a policy passed in Canada that requires Google to pay about $74 million a year to fund journalism.
Why are tech companies agreeing to this now?
Tech companies have fought Wicks’ bill for the past two years, launching expensive opposition campaigns and running ads attacking the legislation. Google threatened in April to temporarily block news websites from showing up in search results for some users in California. The bill had advanced with bipartisan support — until this week.
Wicks told The Associated Press on Thursday that she saw no way out of her bill and that the funding secured through the deal is “better than zero.”
“This represents politics as the art of the possible,” she said.
Industry experts see the deal as a strategy Google has used globally to circumvent regulations.
“Google can’t get out of news because they need it,” said Anya Schiffrin, a professor at Columbia University who studies global media and co-authored a working paper on how much Google and Meta owe news publishers. “So what they’re doing is using a bunch of different tactics to try to stop legislation that would require them to compensate publishers fairly.”
She estimates that Google owes $1.4 billion a year to publishers in California.
Why are journalists and unions against the agreement?
The Media Guild of the West, a union representing journalists in Southern California, Arizona and Texas, said journalists were being left out of the conversation. The union was a champion of Wicks’ bill but was not included in the negotiations with Google.
“The future of journalism should not be decided in backroom deals,” the union said in a letter to lawmakers. “The Legislature began by attempting to regulate monopolies and failed miserably. Now we are left wondering whether the state has done more harm than good.”
The agreement results in a much smaller amount of funding compared to what Google gives to newsrooms in Canada and runs counter to the goal of restoring Google’s dominance over local news organizations, according to a letter the union wrote to Wicks earlier this week.
Others also questioned why the deal included funding to build new AI tools. They see it as another way for tech companies to eventually replace them. Wicks’ original bill did not include any AI provisions.
The deal is supported by a number of journalism groups, including California News Publishers Association, Local Independent Online News Publishers and California Black Media.
What now?
The agreement is set to take effect next year and will provide $100 million in seed funding to kick-start work.
Wicks said the details of the agreement are still being worked out. California Gov. Gavin Newsom has promised to include journalism funding in his January budget, Wicks said, but concerns from other Democratic leaders could derail that plan.
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This story has been updated to correct that the Media Guild of the West, in addition to Southern California and Texas, also represents journalists in Arizona, not Nevada.